Merchants often use techniques to prompt consumers into making a particular purchase. These techniques are commonly in the form of monetary incentives, relying on the principle that a lower price will result in increased sales. Merchants may employ these techniques, for example, to help clear inventory before a new season's merchandise is released, to ease the release of a new product, to increase sales near the end of the fiscal year, to compete with a competitor over particular products, or to generally spur sales.
Monetary incentives may come in the form of a “sale” (i.e. temporary reduction in price at the register), a mail-in rebate (i.e. a refund of part or all of the purchase price by mail), or a store credit (i.e. credit that can be applied to another store purchase). These incentives usually only apply to a particular product and have a time component. For example, a sale may only apply to a particular brand of dishwasher purchased on a particular holiday weekend and a rebate may only be valid for computers purchased within two weeks before the start of classes at a university.
For some credit transactions, a merchant may also use a statement credit as a monetary incentive. A statement credit is an amount refunded back to a credit account and which appears on the account holder's account statement. Using a statement credit as a monetary incentive involves two distinct transactions. In the first transaction, the merchant charges the full amount to a customer's credit account. In the second transaction, the amount of the monetary incentive is then refunded back to the customer's credit account as a statement credit.
Statement credit campaigns offer an advantage for merchants over other types of monetary incentive programs because a transaction handler, such as Visa Inc. or MasterCard Inc, largely handles the administration of the campaign. Once a statement credit campaign is arranged and initiated between a merchant and transaction handler, the transaction handler tracks the statement credit, matches the statement credit to qualifying purchases, and credits the amount of the statement credit to the purchaser's account. The transaction handler then collects the aggregate amount of the statement credits made to multiple purchasers from the merchant.
Transaction handlers also benefit from statement credit campaigns. These campaigns, in combination with other campaigns and programs, lead to increased loyalty to a particular transaction handler and increase the general usage of a particular handler. In addition, statement credit campaigns can also spur usage of one transaction handler over other transaction handlers in individual purchasing decisions because of the monetary incentives available.
One difficulty with statement credit campaigns is the effort required to set up such campaigns. One or more merchants must negotiate with a transaction handler to identify purchases that qualify under the campaign, the effective time period of the campaign, the procedure for dealing with returns of the purchased item, as well as other details. The complexity, time, and corresponding cost of setting up a statement credit campaign effectively limits such campaigns to large merchants or large product manufactures offering statement credits across multiple merchants. Small and medium sized businesses are effectively barred from using this type of monetary incentive due to the setup cost.
Once a statement credit campaign is set up, it is generally inflexible as to changes in the types of products, services, or effective time period. These elements are generally part of the collaboration between the transaction handler and merchant, and are not easily modified. Merchants are therefore locked into a specific statement credit configuration, such as for a set time or for a set product. This, unfortunately, prevents merchants from dynamically using this type of monetary incentive to push specific products or services on an as-needed basis. In addition, it is currently very difficult for a merchant to target a statement credit campaign to a specific individual or set of individuals. For example, it is currently difficult for an online store to target a statement credit to the top 10% of its most frequent customers. This current one-size-fits-all system for statement credit campaigns severely limits the merchant's use of such campaigns.
A general problem for merchants, especially small to mid-sized merchants, is how to efficiently administer any monetary incentive program where money is refunded to the purchaser, whether it is a rebate program, a store credit, or a statement credit campaign. Larger merchants may undertake this responsibility themselves. However, the more processing a merchant must undertake, the more likely the administrative costs of the program will outweigh any benefits. In order to reduce administrative costs, some merchants arrange for third parties to handle the processing and other administrative aspects of these programs. In any case, the projected benefit of the program must be substantially more than the administrative costs. A program with a low administration cost would therefore be more highly desired.
Therefore, there are many factors impeding the use of statement credits, especially by small and medium sized businesses and by larger businesses that may want to use statement credits in a flexible manner to target different products or different customers at different times. Accordingly, it would be an advance in the art of commerce to provide a system that enables merchants to independently establish statement credit campaigns, modify the details of the campaigns as desired, and offload the burden of processing the statement credit to the transaction handler.